Tag Archives: ab1665

Incumbents get first grab at California broadband subsidies and subs in January

Yesterday, California’s broadband infrastructure subsidy fund began its transition from a bottom-up program focused on independent, locally developed projects, to a top down one that’s gamed for the benefit of incumbents. The first post-assembly bill 1665 rules for the California Advanced Services Fund (CASF) were put on the table by the California Public Utilities Commission.

The draft lays out the process for facilities-based incumbents – broadband service providers that own and operate their own equipment, wired or wireless – to exercise their right of first refusal for unserved areas. If they claim an unserved area by 15 January 2018, they’ll effectively have at least year to build out. No one else will be eligible for CASF subsidies.

No one else.

What the draft rules imply but don’t explicitly say, and AB 1665 clearly states anyway, is that an incumbent who takes a right of first refusal on an area will be eligible to apply for CASF grants to pay for at least a part of the work needed to upgrade it. In other words, they go straight to the head of the line.

The process will be more or less run the same way that a much more restrictive right of first refusal offer was three years ago. At the time, only Frontier Communications, in its pre-Verizon acquisition days, held back a handful of small territories. At the time, incumbents couldn’t tap into CASF money and had to pay for the promised upgrades themselves.

This time around, with Frontier hemorrhaging subscribers and shareholder equity and AT&T bent on fencing off its decaying rural copper systems so it can replace them with low performing wireless systems, it might be different. Frontier lobbied hard for AB 1665, in the apparent hope it could turn CASF into its private piggy back. AT&T will be less interested in the money than in protecting its rural monopolies. But both will have an incentive to jump in on the right of first refusal.

What they won’t have a particular incentive to do, though, is to fulfil any of the promises they make. There is no particular penalty for claiming an area for a year, stalling beyond that however they long they can, and then doing nothing at all. There’s a general rule that could be used to penalise false statements, but AT&T and Frontier employ plenty of lawyers and lobbyists who know how to bend and break the truth legally.

The CPUC is scheduled to vote on the right of first refusal scheme next month. Public comments can be submitted for the next two weeks.

Draft resolution – California Advanced Services Fund interim “right of first refusal” processes and timelines, 14 November 2017
Final resolution – implementation of new timelines for California Advanced Services Fund applicants, 26 June 2014
Chaptered version, assembly bill 1665, 15 October 2017

California broadband subsidy program heads for the deep freeze

With the stroke of a pen, governor Jerry Brown transformed the California Advanced Services Fund (CASF) into a piggy bank for AT&T and Frontier Communications. Carve outs for federally subsidised service areas and the right of first refusal on unserved areas give them an opportunity to claim CASF money for the projects they want to do, and block independent projects virtually everywhere else in their service areas.

Going forward, two questions need to be answered: what will happen to pending CASF infrastructure grant applications and how will the California Public Utilities Commission implement the new rules?

Earlier this year, the CPUC went through a preliminary information gathering exercise, in anticipation of assembly bill 1665 becoming law. No conclusions were reached, but one can hope that action will come faster than the 14 months it took to get from the last legislative rework of the CASF program to the first applications accepted under it. Technically, that application window is still open and a project proposal could still be submitted but, given that AB 1665 took effect immediately, there’s no clear path for review and approval.

The same is true for the four pending CASF grant applications. One, in the Kennedy Meadows area in the southern Sierra was submitted by the Ducor Telephone Company is on reasonably firm ground, at least from a statutory perspective. Ducor is a small rural incumbent telco, and has the same rights as Frontier and AT&T in its very limited service area.

But the other three – Surfnet in Santa Cruz County, Renegade in Santa Barbara County and the second phase of the Connect Anza project in Riverside County – are less certain. Past practice indicates that those applications should be evaluated under the rules in effect when submitted. But all three are, to one extent or another, in Frontier’s newly protected service area. Frontier tried to stop a San Bernardino County project by falsely claiming 1. they would have the entire area upgraded by August (they didn’t) and 2. that protecting federally funded areas was already California policy (it wasn’t); it is safe to assume that opposition to the pending projects will be just as fierce and disingenuous.

The only certainty is that nothing will happen quickly. Two of those projects – Surfnet and Ducor – have been stuck in the evaluation process for more than two years, despite a CPUC time limit of three and a half months for such reviews.

The days of big, state-subsidised independent broadband projects are over in California.

California broadband subsidies are now a rigged game

The era of state-subsidised independent broadband projects is over in California. It ended Sunday night when governor Brown signed assembly bill 1665 into law, with immediate effect.

AB 1665 added $300 million to the California Advanced Services Fund (CASF) specifically for infrastructure subsidies, but drastically changed the way the money can be spent. It’s messy and meandering, like most pork laden bills, but the key elements are:

  • The money has to be spent in areas where broadband service is available at less than 6 Mbps download and 1 Mbps upload speeds. A small fraction of the money might go to areas with 10 Mbps down/1 Mbps up in the future, but the critical number is the 1 Mbps up. That’s the limit for AT&T’s and Frontier’s ageing 1990s DSL systems in rural communities.
  • Even then, telcos, cable companies and wireless operators will be able to exercise an annual right of first refusal and block projects in areas that would otherwise qualify for funding. There’s a nominal requirement that whoever blocks projects has to upgrade service, with the help of CASF money of course, but loopholes allow delays that are long enough to kill any independent project that’s on the drawing board.
  • AT&T and Frontier will have the exclusive right to CASF money in areas where they’ve accepted federal subsidies under the Connect America Fund program, at least until mid–2020. The census blocks that have been awarded those federal subsidies are scattered in checkerboard fashion across rural California, effectively killing the business case for independents to expand in whatever CASF-eligible areas might be left.
  • Individual homeowners may apply for means-tested grants to pay some of the cost of building line extensions to their property. As a practical matter, it means cable companies, like Comcast, that have line extension charges built into their business models will be able to tap up to $5 million from CASF to get to homes that are just outside of their existing service areas.
  • By the California Public Utilities Commission’s estimate, the number of CASF-eligible households will plunge from 300,000 to 20,000. I’ve run the numbers too, with similar results: regardless of which assumptions you use, eligibility will drop from hundreds of thousands of homes to tens of thousands.

Most, if not effectively all, of those homes will be reserved for AT&T and Frontier. The game is egregiously rigged in their favor. Such hope as might be left rural California can be found in the words of Robert A. Heinlein:

Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win.

Brown approves $300 million gift to telcos but vetoes streetlight giveaway

Just before the clock hit midnight last night, California governor Jerry Brown signed assembly bill 1665 into law, but vetoed senate bill 649.

AB 1665 takes effect immediately. It lowers California minimum broadband service standard to 6 Mbps download/1 Mbps upload speeds and adds $300 million to the California Advanced Services Fund for broadband infrastructure, to be spent under rules will give it to AT&T and Frontier in exchange for token upgrades. That they would, in most cases, be making anyway.

Unless the legislature overturns Brown’s veto – an unlikely scenario – SB 649 is dead. It would have forced cities and counties to lease streetlights and other vertical infrastructure to wireless companies at a price far below market value, and would have given them open access to most other publicly-owned property.

In his veto message, Brown said making it easier to deploy wireless technology was a worthy goal, but SB 649 was tipped too far in favor of wireless companies…

There is something of real value in having a process that results in extending this innovative technology rapidly and efficiently. Nevertheless, I believe that the interest which localities have in managing rights of way requires a more balanced solution than the one achieved in this bill.

Brown is setting the stage for another attempt next year. It’s a safe bet that it’ll happen. Getting access to street light poles and traffic signals, among other things, and rolling back the ability of local governments to manage permits for wireless infrastructure is a top priority of telecoms lobbyists. Particularly mobile carriers, but also wireline telcos and cable companies that see wireless technology as a way of supplementing their existing service.

Or in the case of Frontier and AT&T, using it as an excuse to downgrade infrastructure by ripping out rural copper networks and replacing them with fixed wireless systems that, at best, will arguably meet the new, lower service standards approved by Brown.

Still waiting for Brown to decide and the dust to clear on California broadband bills

https://upload.wikimedia.org/wikipedia/commons/d/db/Jerry_Brown_Official_Portrait_as_Governor.jpg

Forty years ago, when Jerry Brown was in his first term as California’s governor and I was a cub reporter covering the capitol, he had a reputation for agonising over his legislative decisions right up to the last minute. As he went on to a second term, and then a third and fourth, he and his office became more disciplined and efficient, and usually finished working through the stack of bills sent by the legislature with time to spare.

Not so this year. I can only speculate, but it doesn’t take much of a crystal ball to see that a week of the worst fires in California’s history would throw even the most meticulous work plan out the window.

So, we’re still waiting to learn what will become of assembly bill 1665 and senate bill 649, two major broadband bills written by lobbyists representing deep pocked telephone and cable companies, and passed with varying degrees of enthusiasm by the California legislature.

Brown’s office issued a legislative update late this afternoon, listing which bills had been signed into law and which were vetoed. Neither AB 1665 or SB 649 were on it. But as the deadline nears, the proportion of vetoed bills tends to go up, and this year is no different: 31% of the bills on this afternoon’s list were vetoed, versus 26% yesterday and 25% the day before. It’s very possible Brown could veto both.

Or he could do nothing and let them become law automatically at the stroke of midnight, two hours from now.

His office might or might not put out another update tonight. Even though the decision will be made, by action or default, we might not get positive confirmation until sometime tomorrow.

It’s still a waiting game.

California broadband decisions down to the final day

Governor Jerry Brown signed 40 bills into law yesterday, and vetoed 14 more, but didn’t act on the two major pieces of broadband legislation sitting on his desk: assembly bill 1665, which would lower California’s minimum service standard to 6 Mbps download and 1 Mbps upload speeds, and senate bill 649, which preempts local ownership of street light poles and other vertical infrastructure.

He did approve AB 1145 which gives cable companies public money reserved for public utilities, without public utility obligations.

If he doesn’t act by midnight tonight, the bills automatically become law.

One way or another, major California broadband policy decisions due this weekend

**Update, 15 October 2017, 0754**: no decision yet on AB 1665 or SB 649. Governor Brown signed AB 1145 into law yesterday.

There are two significant broadband-related bills remaining on governor Jerry Brown’s desk, and one relatively minor one, and he’s leaving them until the last minute. For each, he must choose one of three options by 11:59 p.m. Sunday:

  • Sign it into law.
  • Veto it.
  • Do nothing and let it become law automatically Monday morning, at the stroke of midnight.

The two big ones are assembly bill 1665 and senate bill 649. AB 1665 would lower California’s standard for acceptable broadband service to 6 Mbps download and 1 Mbps upload speeds. It also sets aside $300 million for infrastructure deployment under rules that all but guarantee that the money will go to AT&T and Frontier Communications in exchange for minimal service upgrades that they would, in most cases, be doing anyway.

SB 649 is potentially an even bigger gift of public assets to telecoms companies. It requires local governments to lease out vertical infrastructure in the public right of way – streetlight poles, traffic signals and pretty much anything else that sticks up in the air – to wireless companies for $250 a year. That’s below – far below, in some cases – the market rate in most California cities. It also requires cities and counties to lease out other property, whether they want to or not, and prunes back their already limited discretion over where wireless infrastructure can be installed.

Then there’s AB 1145. It gives cable companies access to payments from local government for utility undergrounding projects, without requiring them to meet the obligations that normally fall on a public utility. Cable industry lobbyists also managed to get some deal sweeteners slipped into AB 1665 and SB 649 – cash is king, and Comcast, Charter and friends give a lot of it to California lawmakers. As do AT&T and Frontier.

On the other hand, Brown is hearing from a growing list of opponents) to AB 1665, and nearly every California city and county has gone on record against SB 649. The political heat is rising.

Guessing which way Brown will decide to go is a long running, and frustrating, game in Sacramento. The only thing we know for sure is that we don’t have long to wait.

Governor Brown urged not to lower California’s broadband speed standard

Governor Jerry Brown has two weeks to decide if California’s broadband speed standard should be slower than it is now, and if the California Advanced Services Fund should be turned into a piggy bank for AT&T, Frontier Communications and the cable industry. That’s what assembly bill 1665 would do, if Brown allows it to become law.

He’s getting plenty of encouragement to sign it, from the California Emerging Technology Fund and, one might safely assume, the platoon of lobbyists that telephone and cable companies maintain in Sacramento and back with generous cash contributions to politicians of both parties. Of course, the payments these companies make – which the chief counsel for the state’s ethics agency once described as “kind of legalised bribery” – would be dwarfed by the $300 million that AB 1665 sets aside for them.

There are groups asking the governor to veto the bill, too. The Central Coast Broadband Consortium sent an opposition letter (full disclosure: I drafted it). The North Bay North Coast Consortium sent one too, signed by Mendocino County supervisor Dan Hamburg…

AB 1665 was to re-authorize this vital and popular state broadband program, and we worked hard this year to find a sponsor and bring this bill forward after 2 failed prior attempts. A large coalition of groups came to support the “Internet For All Now” act and momentum was gained. Unfortunately, when the incumbents saw that they could not stop this bill, they were able to insert one damaging amendment after another, each worse than the last, so that eventually the original intent of the bill was lost and now our state broadband program is a give-away to the large incumbent carriers and makes it virtually impossible for the independent providers to get funded. The loss of competition that will result from this bill will be extremely damaging to California’s future.

The California Public Utilities Commission hasn’t taken a public stance on AB 1665, but a strong indicator of where commissioners might lean on it can be found in a Federal Communications Commission filing they unanimously approved on Thursday. They recommended that the FCC keep its current 25 Mbps download/3 Mbps upload speed standard in place.

That’s quite different from lowering California’s minimum speed standard to 6 Mbps down/1 Mbps up standard, as AB 1665 would do.

October dawns with CenturyLink-Level 3 deal still undecided

Today is the day that a CenturyLink lawyer described as “almost too awful to contemplate”: October is here and CenturyLink doesn’t have permission yet to buy Level 3 Communications, from either the California Public Utilities Commission or federal regulators that are reviewing the transaction.

It’s not really all that horrible. The 30 September 2017 deadline was a target that the two companies set for wrapping everything up. It’ll cost them more to keep the financing arrangements intact, but the tab isn’t going to hugely different from what it would have been if they had a better grasp of what it takes to get big telecoms mergers okayed and allowed more time from the beginning. Or if they hadn’t wasted almost five months before filing the right paperwork with the CPUC.

At this point, commissioners are still on track to make a decision at their 12 October 2017 meeting. They’ll have a proposed decision drafted by a CPUC administrative law judge (ALJ) that would approve the deal if adopted. The first round of comments came in, and there’s nothing particularly new. Not in the arguments presented by a group of old school consumer advocacy groups, that don’t see the harm that the merger would do to California’s wholesale broadband market and support it. Or in those made by the California Emerging Technology Fund (CETF), which does understand the damage it would do but wrongly thinks that the solution is to tell CenturyLink how and where to spend a few hundred million dollars on infrastructure projects.

The best way to fix a problem is to not create it in the first place.

Interestingly, CETF wants CenturyLink’s money to go to areas that lack acceptable broadband service based on current California standards – 6 Mbps download and 1.5 Mbps upload speeds – and not according to the dumbed down, slower speeds that CETF, AT&T, Frontier Communications and the California cable industry are pushing governor Brown to sign into law.

It’s possible that the ALJ running the proceeding, Regina DeAngelis, could make changes to the proposed decision ahead of a commission vote, or commissioners are free to offer alternative versions. If that happens, or even if a commissioner just wants more time to think about what’s already on the table, a final vote could be delayed. But so far, that hasn’t happened.

California makes AT&T’s list for limited and costly rural broadband


Taxes not included. Except in my bonus check.

AT&T says it’s official: they are launching slow, expensive wireless Internet service in rural California, and other undefined “underserved” areas, instead of upgrading ageing copper networks to modern levels. The technology is designed to support 10 Mbps download and 1 Mbps upload speeds, although there are no guarantees.

The California Public Utilities Commission, on the other hand, decided to go in the opposition direction and unanimously endorsed the higher standard of 25 Mbps down/3 Mbps up yesterday. That’ll have no effect on AT&T’s fixed wireless roll out though, whenever that actually happens.

There seems to be a different between making it official and making it real. Using the link in the press announcement, I checked a dozen locations in California where AT&T has claimed federal Connect America Fund subsidies – where its wireless local loop service is targeted – and all came back with “AT&T fixed wireless Internet isn’t in your area yet”. I got the same response when I entered the zip codes for a couple of the Texan counties that AT&T specifically called out as ready for fixed wireless service in a separate press release.

California was on a list of nine new states, bring the total where AT&T claims to offer its 10 Mbps down/1 Mbps up wireless substitute service to 18 states.

According to Ars Technica, the base rate for the service is $70 a month, or $60 a month with a contract. AT&T isn’t disclosing the monthly rate on its website, but it does helpfully point out that the base service only includes 160 gigabytes a month. Anything over that costs $10 per 50 GB, up to $200, for a total max charge of $270 a month.

This fixed wireless service is what the California legislature voted to back with $300 million of taxpayer subsidies. Whether it happens or not depends on governor Brown, who has until 15 October 2017 to approve or veto assembly bill 1665.